EPF members must file Form 121 instead of 15G/15H to avoid TDS on early withdrawals; UPI withdrawal still awaits launch date

Employees’ Provident Fund (EPF) subscribers who withdraw money before completing five years of continuous service should now use Form 121, not Forms 15G and 15H, to claim exemption from tax deducted at source (TDS), according to a recent post by the Employees’ Provident Fund Organisation (EPFO) on X, reported by Business Standard on 9 October.

The change applies from tax year 2026-27 and is linked to the Income-tax Act, 2025 and the Income-tax Rules, 2026, the report said.

What Form 121 does

Form 121 is a self-declaration in which an eligible taxpayer states that their estimated tax for the year is nil. It replaces Form 15G, used by individuals below 60, and Form 15H, used by senior citizens, and applies to all eligible individuals regardless of age, Business Standard reported in April.

• TDS can apply when a withdrawal made before five years of continuous service exceeds Rs 50,000
• The TDS rate is 10 per cent where the member furnishes a valid PAN
• The exemption is not automatic; the declaration must be filed every financial year
• It should reach the payer before the amount is paid, preferably at the start of the tax year

Form 121 governs only the upfront deduction. It does not make a withdrawal tax-free, and the amount may still have to be reported and taxed in the income tax return, Business Standard noted. Transfers between PF accounts and certain circumstances beyond an employee’s control may qualify for relief from the five-year condition.

“The form removes the confusion of choosing between different forms,” Pratik Vaidya, managing director of Karma Management Global Consulting Solutions, told Business Standard.

UPI withdrawal yet to get a launch date

A separate plan to let members withdraw PF money through UPI has not yet been given a firm launch date. In May, Labour Minister Mansukh Mandaviya said testing was complete. “We have completed the testing of the facility,” he said, according to PTI, adding that the amount “will be directly transferred into the bank account of the member.”

Under the proposal described by PTI, a portion of a member’s EPF balance will be frozen and a large part made available for UPI withdrawal. Members will see their eligible balance, transfer it to their seeded bank account and authorise the transaction with their UPI PIN. The reform is expected to cover over seven crore members.

PTI reported at the time that EPFO was still resolving software glitches. The auto-settlement limit for advance claims has been raised from Rs 1 lakh to Rs 5 lakh, with such claims settled within three days.

Sources: Business Standard, Business Standard, PTI via The Federal.